2008 (1) TMI 987 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of the prosecution of a partner without arraying the partnership firm as an accused.
2. Compliance with the mandatory condition of issuing a statutory notice u/s 138 of the Negotiable Instruments Act.

Summary:

Issue 1: Validity of Prosecution of a Partner Without Arraying the Partnership Firm

As against the judgment of the lower appellate Court dated 08.02.1999, reversing the trial court's conviction, the present Criminal Appeal has been preferred u/s 378(4) Cr.P.C. The complainant alleged an offence punishable u/s 138 of the Negotiable Instruments Act by the respondent. The trial court convicted the accused, imposing a sentence of six months simple imprisonment and a fine of Rs. 3,000/-. The lower appellate court set aside this conviction, acquitting the accused and directing the refund of the fine.

The complainant, a proprietary concern, alleged that the accused, a partnership firm represented by its partner Subramanian, issued three cheques which were dishonored. The trial court erroneously proceeded on the assumption that the complaint was against Subramanian as an individual. The lower appellate court also erred by observing that the prosecution of a partner alone without arraying the firm was not maintainable. This Court disapproved of the lower appellate court's conclusion, citing the Supreme Court's view in Anil Hada v. Indian Acrylic Ltd. and R. Rajagopal v. S.S. Venkat that a partner can be prosecuted without the firm being an accused, provided the offence by the firm is established.

Issue 2: Compliance with Statutory Notice Requirement

The statutory notice u/s 138 proviso (b) of the Negotiable Instruments Act was issued to Subramanian as an individual, not as a partner representing the partnership firm. The notice described Subramanian as the proprietor of Dalton Ceramic Industries, whereas the complaint described it as a partnership firm. The Supreme Court in Rajneesh Aggarwal v. Amit J. Bhalla and Bilakchand Gyanchand Co. v. A. Chinnaswami held that notice to a director/partner who signed the cheque suffices if it indicates the cheque was issued on behalf of the company/firm. However, in this case, the notice contained a defect in the description of the accused concern, invalidating it as a proper statutory notice to the partnership firm.

The appellant/complainant was unsure of the accused concern's composition, evident from the conflicting descriptions in the statutory notice and the complaint. P.W.1's evasive answers during cross-examination further indicated this uncertainty. Therefore, the prosecution of the accused partnership firm was improper due to the lack of a proper statutory notice.

Conclusion:

For the reasons stated, the judgment of the lower appellate court setting aside the conviction and acquitting the respondent/accused is confirmed. The appeal is dismissed.